Oil prices near $85 per barrel as supplies dwindle

Oil prices rose Tuesday as US supplies fell for the second straight week. Benchmark oil prices for August were up 92 cents to $84.83

Oil rose to near $85 a barrel Wednesday after a report showed U.S. crude supplies fell for a second week, suggesting demand may be improving.

The American Petroleum Institute said late Tuesday that crude inventories fell 700,000 barrels last week, including a 900,000 barrel drop at the key oil storage facilities at Cushing, Oklahoma. Inventories of gasoline rose 2.5 million barrels last week and distillates dropped 700,000 barrels, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday.

Benchmark oil for August delivery was up 92 cents at $84.83 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude dropped $2.08 to settle at $83.91 on Tuesday in New York.

In London, Brent crude for August delivery was up 82 cents at $98.79 per barrel on the ICE Futures exchange.

Crude has slumped from $106 in May amid signs the global economy is slowing. Investors will likely continue to react to economic indicators, particularly the latest data about industrial production and gross domestic product Friday from China, the world's second-largest crude consumer, energy trader and consultant Ritterbusch and Associates said.

"Wide price swings are still anticipated in both directions but with little price change expected across the week," Ritterbusch said in a report. "The Chinese data may well determine how the energy market finishes this week."

In other energy trading, heating oil was up 2.3 cents at $2.74 per gallon and gasoline futures rose 3.6 cents to $2.73 per gallon. Natural gas gained 2.8 cent to $2.77 per 1,000 cubic feet.